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Cost Efficiencies Work Group: Summary of Final Report October 30, 2015
Cost Efficiencies Work Group: Summary of Final Report October 30, 2015
Cost Efficiencies Work Group: Summary of Final Report October 30, 2015
Group
Summary of Final Report
October 30, 2015
Key Findings
Key Findings
1. Comparing costs between different kinds of
projects is difficult and complex.
2. Subsidized affordable housing development
differs from market-rate development in
fundamental ways that tend to add cost.
3. Affordable housing provides more than just a
place to live.
Key Findings
4. The current delivery system prioritizes other
goals over the lowest possible upfront cost.
Affordable projects are built to last: quality and
durability high priorities
Points systems for both state and local funding
reward cost efficiency, but only as one factor
among many
5. Funders could do more to help reduce costs, but
dramatic reductions are probably unattainable
without new sources.
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Architecture/engineering
Legal fees
Developer fee
Capitalized reserves
Other soft costs (studies, reports, etc.)
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Summary of
Recommendations
Important Caveats
An exclusive focus on lowering costs could be
counterproductive:
Could exclude high opportunity neighborhoods in
favor of less expensive locations
Cutting corners up front can cost us more down the
road (avoid subsidizing projects twice)
Very low income and high-needs households are hard
to serve without deep subsidy
Projects built on the cheap may feed NIMBY
resistance
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Recommendations
1. Funders should reward cost-efficient
development without compromising other
important goals like long-term
affordability and financial sustainability.
Put more emphasis in funding decisions on the
cost-efficient use of public subsidies.
Enlist the creativity of development teams to
find more cost efficient strategies and
approaches to development.
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Recommendations
2. Funders should revisit funding processes
and criteria to reduce unnecessary
complexity, delay, and costs.
3. Lenders and investors should explore
alternatives to capitalized operating
reserves.
4. Developers and funders should identify
ways to promote more cost-effective
acquisition of existing housing.
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Recommendations
5. Bureau of Labor and Industries (BOLI)
should better align its prevailing wage
practices with the needs of affordable
housing.
6. Local governments should revisit the
impact of design review and other public
requirements on housing affordability.
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Recommendations
7. Explore new, more flexible sources of
capital for development.
Ideally:
Fewer sources + increased flexibility = reduced
complexity
= lower costs
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